HYDERABAD: Despite the historic $16-trillion global stimulus, the real GDP output of several countries is yet to return to their pre-Covid levels.
Only 6 of the G20 economies’ national output is back to their December, 2019 level, or the pre-Covid period.
This, after committing a massive $10 trillion or more worth economic stimulus in the last 14 months or so.
If you include other major Asian countries, less than half or 12 out of the 28 (including the G20) have barely crossed past the 2019 levels.
Interestingly, barring the US, rest of the 12 comprise Asian economies, while advanced nations including Germany, France and the UK are yet to turn the corner.
On the other hand, Asian peers like China, Taiwan and Hong Kong were not only relatively less hurt due to Covid-19 restrictions, but also managed to recover faster.
For instance, while China was the only country that returned to pre-Covid levels in 2020 itself, others like Indonesia, Taiwan, South Korea, Singapore and Vietnam made it to the list this year.
Hong Kong, which faced back-to-back annual contractions in 2019 and 2020 grappling with political unrest, deteriorating US-China trade ties, and the pandemic, too turned the corner in March led by resilient exports.
However, two large Asian economies -- Japan and India-- continue to struggle both in terms of recovery and containing the virus spread.
India was already witnessing a structural and cyclical slowdown for at least eight quarters straight, when Covid-19 struck last March.
The stringent nationwide lockdown last year was hell-bent as the Asia’s third largest economy suffered the world’s biggest growth contraction in April-June, 2020 at 26% (sequential real GDP in dollar terms).
The following quarter, it did bounce back with a 23.4% growth rate (sequentially), which was also the world’s highest. The next best was by Sri Lanka at 21%. Still, the contraction last year was so huge for India that it’s may take another two - three quarters to regain the pre-pandemic output levels.
Similarly, Japan, too is struggling to shake off the Covid-19 impact.
The world’s third largest economy suffered an 8% contraction in June, 2020 and though it has been witnessing sequential growth, it’s yet to touch December, 2019 real GDP levels.
Meanwhile, the US economy that shrank by 3.4% in 2020 -- the biggest annual drop in the country’s GDP since 1946 -- crossed past the Q4, 2019 output levels in March.
But despite spending over $3.5 trillion stimulus, growth pace slowed down to 1.6% in Q2. Other nations including Germany, France and the UK are yet to make a complete rebound.
The unevenness in recovery was first noted by the IMF, which in July, reiterated that economic prospects continued to diverge across countries and that recovery wasn’t assured even where infections are currently low as long as the virus circulates elsewhere.
According to the World Bank, trade in services will likely remain subdued and isn’t expected to return to pre-pandemic levels before 2022.
The hospitality and travel sectors continue to be the most severly affected adding to an uncertain recovery.
A final contributor is the relative vulnerability of each country’s private sector, with corporate debt burdens in emerging markets and developing economies touching historic levels.
